Search for property

Flipping Homes

As the Greater Toronto Area is becoming more popular for homeowners and investors, available properties that may be good candidates for flipping are becoming scarce. That is good news for the informed investor because rookie investors or those without a skilled advisor are more likely to look elsewhere. Opportunities still exist in Toronto and the Greater Toronto Area (GTA) - it simply requires more due diligence for the investor. A Grange Real Estate agent with expertise in Toronto the GTA as well as investment properties, and renovations is an important partner to have when considering flipping properties for a profit.

What do successful flips have in common? Performing and adhering to extensive and accurate planning, researching, and budgeting. You don't have to love the property, just the profit. However, many believe after watching the flipping homes and renovation reality shows, that there is easy money to be made by flipping homes. After watching a few of these shows I am sure you will witness a handful of financial disasters. Ask a Grange Real Estate agent how to purchase properties sight unseen.

Flipping is an investment strategy that may provide quick and profitable returns. Like most, if not all investments there is significant research that should be exercised prior to commitment. There may be unforeseen circumstances out of your control that will drastically impact your profit (or loss) which is no different than investing in the stock market, bonds, or other investment vehicles.

Where to start?

Before viewing and researching properties you will need to establish a budget which includes specifically the cash you have available to purchase and renovate, and also the cash you require to carry the property until it is sold. The cost associated with early mortgage termination and discharge.

What should be planned and researched?

You will need to know the specifics of the property and the neighborhood. Let's say for example you found a property that appears to be priced well below other homes in the neighborhood. Below are a few questions you should ask.

  • What does the Comparative Market Analysis (CMS) show?
  • Will the area support your post renovation value?
  • How long is the typical home on the market?
  • How many months of inventory are there in the neighborhood?
  • Is there an option to rent the property to allow equity to build?
  • If renting, what is the current vacancy rate and rental costs in the area?
  • What does the home inspection recommend for repairs? (Before buying, you should always have a home inspection, especially for investment properties).
  • In addition to repairs, what renovations should be made to fit or exceed the competitive inventory?
  • Which renovations will provide me the best return on investment? IMPORTANT! When considering your ROI, it is important to consider not only the expenses, but also the time on the market. Remember, you will have carrying costs as the property is being renovated and marketed. For example, updating the landscaping to improve curb appeal may not increase the selling price, but if it helps shorten the time on the market, it will help reduce carrying costs, and help your ROI.